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IHS now expects global semiconductor revenue to edge down 0.1% this year, from its previous outlook of less than 3% growth. This would represent the first annual decline in the industry since 2009.

"The expected decline in 2012 represents a major event for the global semiconductor market," said Dale Ford, senior director at IHS. "Throughout all of 2011, even though electronics markets were very weak, IHS never projected revenue to decline for the entire year."

Mr. Ford noted disappointing second-quarter results and weak third-quarter expectations, as a result of a weak global economy.

Global chip revenue declined 3.6% in the first quarter, compared with the previous quarter, reflecting normal seasonal declines. But revenue growth in the second quarter rose only 3% from the first quarter, weak by historical standards.

Guidance from key chip suppliers indicates the market will grow just more than 6% quarter-over-quarter, another period of subdued expansion that is unlikely to generate sufficient growth to prevent the market from shrinking.

The deceleration of the PC market is the main driver of the contraction, IHS said, while demand from the wireless communications sector hasn't been enough to propel growth.

"While the introduction and shipment of exciting new products such as ultrabooks and other ultrathin PC platforms in the second half of the year will give the PC market a much needed boost, the counterweight of growing economic worries will place strong downward pressure on the overall PC market and limit both consumer and corporate spending in 2012," said Mr. Ford.

IHS has maintained its forecast of a strong recovery in 2013, seeing more than 9% growth that year as the economy is expected to recovery. But a euro-zone crisis, a significant slowdown in China, the potential for a fiscal cliff in the U.S. and turmoil in the Middle East still present risks.

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